Payday Loans and Cash Advance in Pennsylvania

Prohibited by the 6% usury cap. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in Pennsylvania.

Is a Cash Advance Legal in Pennsylvania?

Payday loans are not legal in Pennsylvania. The state has no payday lending statute, and its two general consumer credit laws leave no room for a triple-digit two-week loan. The Loan Interest and Protection Law, Act 6 of 1974, caps interest at 6% a year on loans of $50,000 or less made by anyone without a lending license. The Consumer Discount Company Act requires any lender that wants to charge more than 6% on a loan under $25,000 to be licensed by the Department of Banking and Securities and to stay within that Act's own fee schedule, which is set far below payday levels. The Pennsylvania Supreme Court has enforced those limits against payday products directly: in Department of Banking v. NCAS of Delaware it held that a $500 credit line carrying a $149.95 monthly participation fee, roughly 368% a year, violated the Consumer Discount Company Act, and the court later applied the same rule to lenders operating over the internet. The Department describes payday and car title loans at 300% to 1,000% APR as unlawful in Pennsylvania and warns that borrowers who use unlicensed out-of-state lenders take on excessive risk. What a resident can legally get is a licensed installment loan or a credit union small-dollar loan.

The governing law is Loan Interest and Protection Law (Act 6 of 1974) and Consumer Discount Company Act (41 P.S. 101 et seq.; 7 P.S. 6201 et seq.; 10 Pa. Code ch. 41).

Loan Limits and Terms in Pennsylvania

Pennsylvania has no payday loan law because it never needed one; the general usury framework does the work. An unlicensed lender is held to 6% simple interest a year, and any interest, fee, or charge that pushes the total above that is unlawful. A lender that wants to charge more on a loan under $25,000 must hold a consumer discount company license, submit to examination, and stay within the Consumer Discount Company Act's fee schedule, which does not permit anything close to payday pricing. The Supreme Court's NCAS decision confirmed that fees dressed up as membership or participation charges count toward the cap. The Department of Banking and Securities enforces both laws, has settled with out-of-state payday lenders that charged Pennsylvanians illegal rates, and publishes a list of non-bank licensees so you can check any lender before signing.

What a $300 Loan Costs in Pennsylvania

There is no legal payday loan in Pennsylvania, so this shows the most any lender without a consumer discount company license may charge. The Loan Interest and Protection Law caps interest at 6% simple per year on loans of $50,000 or less: 300 x 0.06 x 14 / 365 = $0.69 for 14 days, total $300.69. APR = 0.69 / 300 x 365 / 14 = 0.06, or 6%. A licensed consumer discount company may charge more under its own statutory schedule, but any charge that aggregates above 6% from an unlicensed lender is unlawful under the NCAS decision.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in Pennsylvania

• Any lender charging more than 6% a year on a loan under $25,000 must hold a consumer discount company license from the Department of Banking and Securities, and the Department publishes a searchable list of non-bank licensees.
• The Loan Interest and Protection Law caps interest at 6% simple per year for unlicensed lenders on loans of $50,000 or less, and the Supreme Court has held that participation fees and similar charges count toward that limit.
• The Pennsylvania Supreme Court in Department of Banking v. NCAS of Delaware ruled that a $149.95 monthly fee on a $500 credit line, about 368% a year, violated the Consumer Discount Company Act because the lender was unlicensed.
• The Department of Banking and Securities has settled enforcement actions against out-of-state payday lenders for charging Pennsylvanians rates far above the legal limit and urges consumers to verify a license before borrowing.
• The Department's Consumer Help Center takes complaints about consumer lenders by phone at 800-722-2657 or through its online portal and aims to respond within 10 days of receipt.
• A licensed consumer discount company may charge no more than 1.5% per month on a balance it agrees to defer or extend, and interest on any amount over $25,000 is limited to the 6% legal rate.
• Active duty service members and their dependents are separately protected by the federal Military Lending Act, which caps the total cost of consumer credit at 36% APR nationwide.

Complaints and licence checks go to the Pennsylvania Department of Banking and Securities: 800-722-2657, www.pa.gov/agencies/dobs, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in Pennsylvania

There are no payday storefronts in Pennsylvania because the product cannot be offered legally. The pressure comes from online lenders based in other states or affiliated with tribes, which continue to market two-week and installment loans at payday rates to Pennsylvania residents. The Department of Banking and Securities has been clear that this does not change the law: the Supreme Court's NCAS decision and its later ruling on internet lenders established that a lender reaching Pennsylvania consumers over the internet must be licensed here and must comply with the Consumer Discount Company Act, and the Department has settled cases against out-of-state online lenders that ignored that rule. Its 2015 statement told consumers that they are taking excessive risk by doing business with unlicensed, out-of-state lenders, and that loans at 300% to 1,000% APR are unlawful in the Commonwealth. Before dealing with any online lender, search the Department's non-bank licensee list or call 800-722-2657. If an unlicensed lender is already debiting your account, file a complaint with the Department; for a tribal lender that claims immunity from state law, the Consumer Financial Protection Bureau and the Federal Trade Commission also take complaints.

Alternatives If a Payday Loan Is Not the Right Fit

The legal small-dollar product in Pennsylvania is an installment loan from a consumer discount company licensed under the Consumer Discount Company Act. These lenders can make loans up to $25,000 repaid over months, are examined by the Department of Banking and Securities, and must stay within the Act's fee schedule; the Department's licensee search shows who holds the license. Federal credit unions can offer payday alternative loans of $200 to $2,000 at no more than 28% APR under National Credit Union Administration rules, and many Pennsylvania credit unions run their own emergency loan programs for members. Some employers provide earned wage access or a payroll advance with no finance charge. For a utility, rent, or food emergency, the Pennsylvania 211 line, county assistance offices, and the Low-Income Home Energy Assistance Program connect residents with help that does not have to be repaid. A hardship arrangement with the creditor you owe is usually free, and even a credit card cash advance is a fraction of what an illegal online payday loan would cost.

Compare the installment loan and payday alternative loan options before you decide.

Frequently Asked Questions

Nearby States

• New YorkThe fee cap, a worked example and the regulator to call in New York.
• New JerseyThe fee cap, a worked example and the regulator to call in New Jersey.
• DelawareThe fee cap, a worked example and the regulator to call in Delaware.
• MarylandThe fee cap, a worked example and the regulator to call in Maryland.
• West VirginiaThe fee cap, a worked example and the regulator to call in West Virginia.
• OhioThe fee cap, a worked example and the regulator to call in Ohio.